Founded on 6 March 1902 as the Madrid Football Club, the club has traditionally worn a white home kit since inception. The word real is Spanish for "royal" and was bestowed to the club by King Alfonso XIII in 1920 together with the royal crown in the emblem. The team has played its home matches in the 81,044-capacity Santiago Bernabéu Stadium in downtown Madrid since 1947. Unlike most European sporting entities, Real Madrid's members (socios) have owned and operated the club throughout its history.

After moving between grounds, the team moved to the Campo de O'Donnell in 1912, which remained its home ground for 11 years.[20] After this period, the club moved for one year to the Campo de Ciudad Lineal, a small ground with a capacity of 8,000 spectators. After that, Real Madrid moved its home matches to Estadio Chamartín, which was inaugurated on 17 May 1923 with a match against Newcastle United.[124] In this stadium, which hosted 22,500 spectators, Real Madrid celebrated its first Spanish league title.[22] After some successes, the 1943 elected president Santiago Bernabéu decided that the Estadio Chamartín was not big enough for the ambitions of the club, and thus a new stadium was built and was inaugurated on 14 December 1947.[29][125] This was the Santiago Bernabéu Stadium as it is known today, although it did not acquire the present name until 1955.[30] The first match at the Bernabéu was played between Real Madrid and the Portuguese club Belenenses and won by Los Blancos, 3–1, the first goal being scored by Sabino Barinaga.[29]

The capacity has changed frequently, peaking at 120,000 after a 1953 expansion.[126] Since then, there have been a number of reductions due to modernizations (the last standing places went away in 1998–99 in response to UEFA regulations which forbids standing at matches in the UEFA competition), countered to some extent by expansions.[126] The latest capacity is 81,044 spectators. A plan to add a retractable roof has been announced.[125] Real Madrid has the fourth-highest of the average attendances of European football clubs, behind only Borussia Dortmund, Barcelona and Manchester United.[127][128][129][130]